Posted on 02/09/2006 6:54:40 AM PST by Extremely Extreme Extremist
Feb 8, 2006 — By Kristin Roberts
WASHINGTON (Reuters) - New York Democrat Sen. Hillary Clinton has entered the debate over Wal-Mart's controversial bank application, telling regulators she has "serious reservations" about allowing companies to enter financial services by exploiting a "loophole" in U.S. law.
According to a February 3 letter obtained by Reuters on Wednesday, Clinton, a former Wal-Mart board member, told the Federal Deposit Insurance Corp. the retailer's bid to open an industrial loan company (ILC), if successful, could have a significant impact on the financial sector.
"After hearing from very concerned constituents about Wal-Mart's application for federal insurance for their ILC, I see this as a time to urge the FDIC to give serious and careful review to the relevant issues before moving forward on any application for federal insurance," Clinton wrote to the FDIC's acting chairman.
"Indeed, I believe that any action by the FDIC that would lessen or loosen the oversight for ILCs while granting it the same privileges and functions of traditional commercial banks would be a critical mistake and stand in stark contrast to the fundamental principle of the separation of banking and commerce."
Clinton's letter is the latest in a string of correspondence from Capitol Hill to the FDIC urging the regulatory agency to either oppose or move slowly and carefully on the application from the world's largest retailer to open an industrial bank in Utah.
A spokesman for the FDIC said the agency's acting chairman had received Clinton's letter but had not yet responded. He declined further comment.
Industrial banks are state-chartered and state-regulated, and fall under the supervision of the FDIC. Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify them as banks.
Wal-Mart is trying to open a bank to handle electronic payment processing.
But some legislators have raised concerns that Wal-Mart could use its bank as a base to offer a much wider array of services. Banks also fear competing with Wal-Mart.
Others who oppose Wal-Mart's application adopt the argument used recently by Clinton and the National Association of Realtors — that Wal-Mart's bank would violate the historic separation in the United States between banks and enterprises that do not engage primarily in finance. Still, other corporations have already set up industrial banks, such as General Electric and General Motors.
Former Federal Reserve Chairman Alan Greenspan recently said Congress should review a "loophole" in federal law that allows companies to buy industrial banks in a handful of states but avoid a level of supervision by bank regulators.
Clinton referenced Greenspan's comments and said industrial banks may pose a greater risk to the FDIC than other insured depository institutions.
"With the dramatic expansion of ILCs over the last several decades, I am particularly concerned that these financial institutions do not have the same oversight and regulatory structure that traditional, full-service commercial banks have," she wrote.
The FDIC, under a new acting chairman, has agreed to hold a public hearing on Wal-Mart's application. That would be the agency's first formal public hearing on a bank application ever. A subcommittee in the House of Representatives also is expected to hold a hearing on industrial banks this year.
Wal-Mart has said it welcomes the hearings. It was not immediately available to comment on Clinton's letter.
Gee, this couldn't be because Citigroup is one of her largest contributors...?
Just wait until WalMart starts releasing all of its board minutes and memos from Hillary's time on the board..
If it was any other company than Wal-Mart this wouldn't be news and said company would have the ILC up and running already.
Clinton and the Dems are going to demonize Walmart in the upcoming elections.
WalMart will probably do to banking what it did to retail. Outsource IT and accounting to China or India and slash prices of credit cards and loans.
I'm all for it!
"She's obviously afraid that WalMart will force all the "Mom and Pop" banks out of business."
Nice
I hope Wal-Mart succeeds.
That's odd, she didn't have any reservations about taking sweetheart loans from a Savings and Loan that went bankrupt - at taxpayers' expense.
NAR is fighting banks wanting to sell real estate. Just can't see Wal Mart selling real estate.
I don't have anything against Walmart, but I do have something against unregulated banks. The savings and loan debacle cost us a large fortune. If the Federal government is going to insure bank deposits, it should have the right to see what the bank is doing.
You bet Walmart knows they are getting ripped off by the card processors. Their 2003 settlement victory helped prove it:
"Interchange fees came under fire in 2003 when Wal-Mart settled with the card companies for $3 billion dollars. As part of the settlement, the retailer won the right not to accept certain high fee debit cards, which are generally favored by banks because they bring in high revenues. Card companies argue that the high-fee premium cards are good for merchants since they attract bigger spenders."
http://www.inc.com/criticalnews/articles/200506/econ.html
Dear Mrs. Clinton:
If people don't want to do their banking with a certain bank, they can CHOOSE to go to another bank.
This is similar to people CHOOSING to shop at Wal-Mart. It's not Wal-Mart that puts Mom & Pop shops out of business--it's the locals that choose to steward God's money properly.
Sheesh, I'm so tired of this bashing Wal-Mart business. It makes me support them with my $$$ even more.
This from a woman that made one hundred thousand dollars on a one thousand dollar investment in the commodities market! What loop hole did she use for that, and has she invested in commodities since? if there were any loop holes where the Clinton's could fatten their purse, the carpetbagger and Slick used it.
"Senator Clinton urges caution on Wal-Mart bank bid"
Translation? "Wal-Mart hasn't greased Senator Clinton yet."
Ping.
Target and other retailors already do their own "banking" in regards to credit and debit transactions.
I read another article that stated that the FDIC had received more than 15,000 letters protesting Wal-Mart's application, usually they only get 5 or 6.
Couldn't be a union organized campaign against Wal-Mart could it? Nah, they wouldn't do that would they?
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